Japan's bankruptcy filings hit 11-year high in FY2024/25, TSR tally shows
Japan recorded 10,144 corporate bankruptcies in fiscal 2024 (ending March 2025), the highest level in 11 years, according to credit research firm Tokyo Shoko Research (TSR).
This marked a 12% increase from the previous year and reflected mounting economic pressures including inflation, rising labor costs, and persistent labor shortages.
In April alone, 828 companies in Japan with debts of at least 10 million yen filed for bankruptcy — the highest monthly figure in over a decade.
Most of these were small and mid-sized firms with weak business foundations, whose earnings were squeezed by increasing material and labor costs.
Nearly 80% of bankruptcies involved firms with liabilities under 100 million yen, a segment that saw an 11.3% year-on-year rise.
Despite the rise in the number of bankruptcies, total liabilities of failed firms declined to 2.37 trillion yen ($16.08 billion), down 9.3% from 2.46 trillion yen in fiscal 2023. This drop is attributed to a decrease in large-scale bankruptcies.
The most notable exception was the liquidation of former Mitsubishi Aircraft Corp, which left behind 641 billion yen in debt following the termination of its SpaceJet project.
Sector-wise, the service industry saw a record 292 bankruptcies in April, up 10.6% year-on-year, followed by construction (152 cases, up 4.1%) and retail (106 cases, up 32.5%).
Most industries, excluding finance and transportation, saw year-over-year increases in failures.
The number of companies collapsing due to labour shortages rose to 36 from 25 the previous year, while those citing inflation as the primary cause remained high at 56 cases.
TSR noted that although US trade policies under Donald Trump had limited direct impact, many smaller firms in Japan are still burdened by pandemic-era debts. Any future trade or tariff-related disruptions could hurt export-dependent sectors such as manufacturing, potentially leading to more bankruptcies.
Bankruptcy trends are closely monitored by the Bank of Japan (BOJ) as a gauge of economic health. BOJ Governor Kazuo Ueda has indicated that interest rate hikes will continue if wage growth, including among small businesses, remains robust enough to support domestic demand and sustainable economic expansion.
Reuters
